The outlook for USD/CNH is expected to remain constructive as long as it trades above the 6.4200 level, noted FX Strategists at UOB Group.
24-hour view: “We highlighted yesterday that ‘the underlying tone has softened’ and we were of the view that USD ‘could drift lower but is unlikely to threaten the support at 6.4400’. Our expectation did not materialize as USD traded in a relatively quiet manner between 6.4543 and 6.4742. The underlying tone still appears to be soft and we continue to see chance for USD to drift lower to 6.4400. For today, a sustained decline below this level is unlikely. Resistance is at 6.4680 followed by 6.4760.”
Next 1-3 weeks: “One week ago on 17 Feb (spot at 6.4285), we held the view ‘the current rebound in USD could extend to 6.4500’. As USD advances, we noted in our latest narrative from last Friday (19 Feb, spot at 6.4580) that ‘outlook for USD is still positive’ and ‘the next resistance level of note is at 6.4920’. USD rose to 6.4760 yesterday before easing off. Shorter-term momentum has waned somewhat but there is no change in our view for now. Only a break of 6.4200 (no change in ‘strong support’ level) would indicate that 6.4920 is out of reach this time round.”
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